Intellectual property law is good. Excess in intellectual property law is not. This blog is about excess in Canadian and international copyright law, trademarks law and patent law. I practice IP law with Macera & Jarzyna, LLP in Ottawa, Canada. I've also been in government and academe. My views are purely personal and don't necessarily reflect those of my firm or any of its clients. Nothing on this blog should be taken as legal advice.

Thursday, April 14, 2016

Access Copyright v. CMEC re K-12 – Is it “Mission Accomplished” or "The End of the Beginning"?

or

???

I originally wrote about the Copyright Board’s February 19, 2016 K-12 Tariff
decision and its immediate aftermathhere. Below are some further developments.Not surprisingly, Access Copyright (“AC”) is pursuing judicial
review (“JR”, or an “appeal” in layperson’s terminology). Except for the
surprising outcome that would potentially give it almost $10 million per annum
based almost solely on the reproduction of “consumables” (assuming all school
boards actually decide to pay – which is very doubtful - see below), AC lost
badly on just about every other conceivable aspect – including some very
important ones such as fair dealing, insubstantial copying, and its agency by
ratification argument, about which the Board has effectively, even if
belatedly, done a 180 degree turn around. Here isAC’s comparatively
fulsome JR Notice of Application.

Somewhat surprisingly in view of the arguably much too high FTE
rate of $2.46, CMEC, which represents school boards outside of Quebec, isnotseeking JR. For those interested in
Federal Court of Appeal procedure, there is no such thing as “cross” judicial
review. Each party needs to launch its own JR on or before the 30 day deadline.
In this case, only AC did so. CMEC (Council of Ministers of Education, Canada) will
no doubt ably defend AC’s JR but has not commenced its own, perhaps for the
reasons I speculate about below.

This decision representsa complete victory for the K-12 schools with respect
to a number of important legal issues addressed by the Board in its decision,
including the application of the fair dealing provisions contained in the Copyright
Act (the "Act") to K-12 schools, the adoption of a
quantitative test to determine the scope of "non-substantial" copying
under the Act, and Access Copyright's ability to represent the
interests of rights holders in relation to whom it has not formally entered
into an affiliation agreement.

In terms of the specific rates approved by the Board,Access
Copyright had initially proposed annual rates of $15.00 per student for the
period of 2010-2012 and $9.50per
student for the period of 2013-2015. In its tariff decision, however, the
Board certifiedroyalty rates of $2.46 per student for the first
tariff period and $2.41for
the second tariff period. If this tariff
is ultimately taken up by the K-12 schools, these rates are expected to
generate approximately $9.4 million per year for Access Copyright, or about $56
million over the course of the six years covered by the tariff.

For reasons which I explain in more detail on my earlier blog, the
rates of $2.46 per student for the first tariff period and $2.41 for the second
tariff period, based almost entirely on “consumables”) seem surprisingly high by
a factor of about 500%. However, I will not speculate on whether there might
have been grounds for CMEC to attack that result by way of JR.

So, I can only speculate that CMEC’s decision not to pursue its
own JR may be based – perhaps in large measure - upon a possible assessment that
it need not expend any more resources than necessary to fight a tariff that may
not matter and be effectively optional in the end. Note CMEC counsel’s
interesting wording in the Lexology piece: “If this tariff is ultimately taken up by the K-12
schools…” (emphasis and
highlight added)

CMEC may have concluded that its members can rely on fair dealing
and clear whatever rights they may need in a more efficient and less expensive
manner than pursuant a non-mandatory AC Copyright Board tariff. CMEC may be taking
comfort in the recentCBC v. SODRACdecision from the Supreme Court of Canada, which indicates that
the Board’s tariffs are not de jure mandatory.
Indeed, even before that decision, the CMEC school boards stopped paying
anything to AC in after 2013, asAC’s 2014 annual
report confirms.I emphasize that I am only speculating, since CMEC naturally has
not disclosed its strategy publicly.

Regarding the “mandatory tariff” issue, all eyes are naturally now turning to York University and its
forthcoming three week trial at the suit of AC dues to begin on May 16, 2016.
This case is based upon the mandatory tariff theory, now debunked by the
Supreme Court of Canada. Indeed, York is being sued under the Board’s “interim
tariff” imposed just before Christmas in 2010, which was not even a final certified
tariff. This is not a copyright
infringement action, and could not have been because AC has no standing on its
own to sue for copyright infringement.

Of course, if York University - even with the authority of the
recent CBC v. SODRAC decision of the Supreme Court of Canada - should somehow fail
to decisively prevail against AC on the “mandatory tariff”
aspect which is the basis of AC’s forthcoming Federal Court case due to start
on May 16, 2016, there could be big trouble for the entire educational
establishment, including CMEC’s school board members.

It’s also worth noting that many of the issues that will
presumably be argued in this AC K-12 JR, such as those concerning fair dealing,
will likely be argued much sooner in theJR of the
Provincial tariff, which could be heard and decided even in the next few
months.

That decision from the Federal Court of Appeal could also come after
the hearing but before the judgment in the AC v. York University trial. That
could be interesting. And there is also the pending decision by the Copyright
Board in the AC Post-Secondary case that concluded in January of 2016. While
the Board has, in recent times, taken two years or even more to render a decision,
one hopes that this time frame will now lessen dramatically to the judicial
norm in Canada of six months or less. What the Federal Court of Appeal decides
is binding on the Federal Court. What the Copyright Board decides could be
influential, even if not binding. There are a lot of things up in the air now –
and where, when and how they all finally land will be very interesting.

So, as far as the K-12 Tariff goes, CMEC may purport to consider
that this is a case about “Mission Accomplished” and there’s only a little bit
of clean up left to do in defending the AC JR, which may be largely determined
in any event by the JR of the Provincial tariff. It may be that things
turn out that way, although we all know how recent history shows that “Mission Accomplished”
is not always a safe conclusion.

Moreover, as in the Middle East, where the “Mission Accomplished”
motto has achieved such notoriety, there are many players engaged in Canada’s
copyright collective battles and each have complex agendas and nobody is in
control. Thus, “Mission Accomplished” may not turn out to be the appropriate
phrase. Is it possible that Winston Churchill’s immortalwordsmay turn out to be applicable?

Now this is not the end. It is not even the beginning of the end.
But it is, perhaps, the end of the beginning.

Post-secondary
revenues are projected to drop from over $10 million in 2015 to less than $2
million in 2016, and the resumption of K-12 schools revenue remains uncertain,
even after the recently certified tariff for K-12 schools.

Our strategic plan anticipated that we would operate in the red for a certain time in order to complete the transformation—and we are prepared for that possibility.

…

In the
Provincial-Territorial tariff decision and recent K-12 tariff decision,
the Copyright Board’s troublingly opaque assessments
lead to outcomes that are simultaneously unfair for
rightsholders and impractical for users. These decisions
highlight the systemic dysfunction in the Canadian
copyright landscape today and further underscore the
importance of legislative reform.

(highlight added)

All I can do, however, is to conclude,
as Yogi Berra once said, “It's tough to make predictions, especially about the
future.”